Babulal Jain and Smt. Dilkush B. Jain V. Union of India

CW/4565/2001

AI Insights

The case involves two writ petitions filed by Babulal Jain and his wife, Smt. Dilkush B. Jain, challenging the forfeiture of their properties under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA). The forfeiture was initially based on the detention of Babulal Jain under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), which was later revoked. The court found that the revocation of the detention order undermined the basis for the property forfeiture and thus remitted the case for a fresh decision by the competent authority.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 803136 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 09-03-2009
• Assessment Year: misc
• Laws Referred To: Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA)
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RISHABH SANCHETI
• Assessee Lawyers: SANDEEP MEHTA; VINEET J AIN; V K MATHUR
• Keywords: Competent authority; Detention Order; Forfeiture of properties; Unlawful activities; Revocation of detention
• Section: 7; 3(1); 8(f); 2(2)(b); 2(2)(c)

Judgement Text

"1 (1) S.B.CIVIL WRIT PETITION NO.4565/2001 (Babulal Jain Vs. Union of India & ors.) (2) S.B.CIVIL WRIT PETITION NO.4567/2001 (Smt.Dilkush B.Jain Vs. Union of India & ors.) Date of order :: 9th March 2009 HON'BLE MR.JUSTICE DINESH MAHESHWARI Mr.Sandeep Mehta) for the petitioners Mr.Vineet Jain ) Mr.V.K.Mathur ) for the respondents Mr.Rishabh Sancheti) BY THE COURT: These two writ petitions involving similar and inter- connected facts and having been filed against the same impugned orders, have been considered together and are taken up for disposal by this common order. In view of the relevant subsequent events, the matter is proposed to be remitted to the competent authority for decision afresh and hence, only a brief reference to the background facts would suffice. The petitioner Babulal Rajmal Jain (CWP No. 4565/2001) was ordered to be detained by the Government of India under an order dated 20.12.1994 issued under Section 3(1) of the Conservation of Foreign Exchange 2 and Prevention of Smuggling Activities Act, 1974 (COFEPOSA). Standing the said order, the petitioner Babulal Rajmal Jain was found absconding and thus, was considered to be a person falling within the purview of Section 2(2)(b) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property Act), 1976 (SAFEMA); and the other petitioner Smt. Dilkhush Babulal Jain, wife of the petitioner Babulal Jain, was considered to be a person to whom the provisions of Section 2(2)(c) of SAFEMA were applicable. The competent authority under SAFEMA ultimately proceeded to pass the order dated 28.05.1999 against both the petitioners for forfeiture of the properties acquired in the names of either of them as described in paragraph-4 of the order. The authority found that the petitioner Babulal Jain was absconding and was not respecting the process of law and the non-applicants were unable to adduce evidence proving legality of their properties and thus, held that all the properties were acquired out of the income generated by the petitioner Babulal Jain through his unlawful activities. The authority said,- ''It is seen from the records that the AP-1 is absconding since the issue of detention order. There has been no effort on his part to respect the process of law. Several opportunities were given 3 to the AP's to reply to the show cause notice and to appear for personal hearing but they failed to avail them. APs have not availed the benefit of several opportunities given to them for personal hearing. It appears that APs have no proof or evidence whatsoever whereby they can prove the legality of their properties. Keeping in view the above circumstances I have no hesitation to hold all the properties have been acquired out of the income generated by AP-1 through his unlawful activities. In view of the above, I am satisfied beyond doubt that AP1 has failed to prove the legality of the sources by which he has acquired the properties under notice. Similarly, the properties held by AP-2 in her name are to be treated as traceable to the illegal activities of AP-1 in the absence of any proof that these have been acquired out of her own funds and are not traceable to AP1, and therefore also liable to be forfeited to the Central Government free from all encumbrances. Thus, the properties of Ap-1 & Ap-2 are illegally acquired properties as defined under Section 3 of SAFEMA and accordingly, I order their forfeiture to the Central Government, free from all encumbrances under Sec.7 of Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.'' The order so passed was maintained by the Appellate Tribunal while dismissing the joint appeal filed by the petitioners on 21.08.2001. The petitioners preferred these two writ petitions while assailing the orders aforesaid and contending that the provisions of SAFEMA could not have been invoked for forfeiture of their properties because the order of detention allegedly passed against the petitioner Babulal Jain under COFEPOSA was never served upon him 4 and that outlived itself. The petitioners have also contended that the competent authority as well as the Appellate Tribunal while passing the impugned orders for forfeiture of the properties ignored the evidence of disclosure in the returns and the statements under the Income Tax Act and Wealth Tax Act; that the property in the form of tenancy right of shop as running business could not have been forfeited; that the proceedings against the petitioner under SAFEMA were not justified when the main accused was let off; and that the notice under SAFEMA was without jurisdiction for having been issued without satisfying the conditions precedent for invoking such jurisdiction. However, a relevant subsequent event has taken place during the pendency of these writ petitions inasmuch as the order of detention of the petitioner Babulal Jain was placed for confirmation before the Advisory Board constituted under COFEPOSA and the Advisory Board was of opinion that there did not exist sufficient cause for his detention; and accordingly, the detention of the petitioner Babulal Jain was revoked by the Central Government by its order dated 31.07.2008. A copy of the said order dated 31.07.2008 has been placed on the record of CWP No.4567/2001 wherein the Central Government in its Ministry of Finance has ordered 5 thus: ''WHEREAS an order F.No.673/208/94- Cus.VIII dated 20.12.94 was passed by the Joint Secretary to the Government of India under Section 3(1) of the Conservation Foreign Exchange and Prevention of Smuggling Activities Act, 1974 for detention of Shri Babulal Rajmal Jain @ Singhvi. AND WHEREAS the case of Shri Babulal Rajmal Jain @ Singhvi was placed before the Advisory Board who were of the opinion that sufficient cause did not exist for detention of Shri Babulal Rajmal Jain @ Singhvi. WHEREAS, the Central Government has fully considered the report of the Advisory Board and material on record. NOW, THEREFORE, in exercise of the powers conferred by Section 8(f) of the aforesaid Act, the Central Government hereby revokes the aforesaid Detention Order and directs that Shri Babulal Rajmal Jain @ Singhvi be released from the COFEPOSA detention forthwith.'' It is the contention of the petitioners that in view of the aforesaid order revoking the detention of the petitioner Babulal Jain, the very basis of forfeiture of the properties under the impugned order has been knocked out. The fact of passing of such an order by the Central Government is not in dispute; and it is seriously questionable if the provisions of SAFEMA could be said to be applicable in relation to the petitioners particularly in view of the relevant subsequent event of 6 revocation of the order of detention of the petitioner Babulal Jain. In the aforesaid view of the matter, this Court is of opinion that interest of justice requires that the impugned order be quashed and set aside and the matter be remitted for consideration of the effect of the aforesaid subsequent event of revocation of detention order and then passing of appropriate order by the competent authority in accordance with law. Accordingly, these writ petitions are allowed to the extent indicated above; the impugned orders dated 28.05.1999 and 21.08.2001 are quashed and set aside; and the matter is remitted for consideration of the effect of the aforesaid subsequent event of revocation of detention order and then passing of appropriate order by the competent authority in accordance with law. The parties through counsel present before this Court shall stand at notice to appear before the competent authority on 10.04.2009. It goes without saying that this order shall not be of any prejudice to either of the parties in taking recourse to appropriate proceedings in accordance with law nor shall this order have any adverse effect on any other proceedings in any other law, if pending or contemplated in relation to the 7 petitioners. There shall be no order as to costs of these petitions. (DINESH MAHESHWARI),J. MK S.B.CIVIL WRIT PETITION NO.4567/2001 (Smt.Dilkush B.Jain Vs. Union of India & ors.) Date of order :: 9th March 2009 HON'BLE MR.JUSTICE DINESH MAHESHWARI Mr.Sandeep Mehta) for the petitioners Mr.Vineet Jain ) Mr.V.K.Mathur ) for the respondents Mr.Rishabh Sancheti) The writ petition is allowed to the extent indicated in common order made in S.B.Civil Writ Petition No.4565/2001: Babulal Jain Vs. Union of India & ors. (DINESH MAHESHWARI),J. MK "